A better understanding of where government funding is going

The government has decided to start using charity and Companies House numbers to identify which organisations have been awarded Crown Commercial Service contracts. This kick-starts a journey towards greater transparency which will increase our understanding of where all public funding is going and improve the effectiveness of public services.

The need for better reporting by government

This week we published out latest estimates for the government’s spending with voluntary organisations as part of our UK Civil Society Almanac (the most comprehensive financial dataset for the voluntary sector).

These sought-after figures are considerably more reliable than the government’s own estimates, but they are extrapolated from a relatively small sample of charity accounts data, so there’s some margin for error. There’s also a time lag of around 18 months while this data is analysed, as charities file accounts up to 10 months after the end of their financial year.

For our figures to be more accurate and timely, we need better reporting by government – both local and central – on its spending to the sector.

Government takes steps towards greater transparency

This includes plans to implement the Open Contracting Data Standard (OCDS), a framework for publishing public procurement data. Once operational, key information about public services contracts – including their value and who they’ve been awarded to – will be publically available and published in a consistent way.

Similarly, there are also plans to collect and publish more detailed data on government grant making, and to make this information publically available using the 360 Giving Standard, a framework for publishing detailed grants data.

However, for any emerging data to be truly useful, we need to be able to link it to a specific supplier (service provider) and buyer (public body) so that figures can be cross-referenced and trends identified.

Joining the dots with ‘unique identifiers’

To do this, each actor in the contracting process needs to be assigned a ‘unique identifier’ number. Without a unique identifier, analysts have to match organisation names to known registers, such as the Charity Commission’s database. However, because a public body is free to record this information how they wish, there is a lot of room for variation and error in how it is reported (our research team encountered this very problem in a recent project working with local authority data).

For example, consider some of the following ways a public body might label NCVO:

NCVO

The NCVO

National Council for Voluntary Organisations

The National Council for Voluntary Organisations

National Council for Voluntary Organisations (NCVO)

National Council of Voluntary Organisations

Add into the mix duplicate names and typos, and the matter gets even messier. The objectivity of numbers helps avoid any potential for error.

Regular followers of our public services policy work will know NCVO has long-campaigned for government to use of charity and Companies House numbers as unique identifiers when reporting on its funding. This is because they are well-established identifiers already used for many other purposes, such as filing charity accounts.

A small but significant win

This persistence has finally paid off. In recent months we’ve been working with Crown Commercial Service’s open contracting steering group to help improve contracting transparency. Part of this work has culminated in a decision to assign unique identifiers – using charity and Companies House numbers – to contract award notices on Contracts Finder.

While this will initially only apply to the award notices for Crown Commercial Service then central government contracts, the long term goal is to expand the requirement to all public sector contracting, including local government and other public bodies.

Following the money…

This isn’t just about improving the accuracy and timeliness of our Almanac data, important as that is. By following the money, policymakers, commissioners and armchair auditors will be able to analyse, among other things:

the proportion of public expenditure, disaggregated by department, local authority or programme, that goes to charities (and changes in those proportions over time)

the numbers of charities with which public bodies, including local authorities, have relationships

the size of charities and the areas where they operate

comparison of these trends between regions and communities

Understanding which organisations and individual services are receiving funding is important for helping to identify needs, design innovative service solutions, and – particularly for charities – campaign for change.

The use of charity and Companies House numbers will also allow us to monitor the government’s pledge to encourage more procurement spend going to the SME sector (remember, the vast majority of charities are SMEs).

Where next?

Realistically, the ultimate goal of having all public bodies reporting their procurement spend using charity numbers as unique identifiers is while off yet. That said, the government is on the right path for transparency in public contracts (although it’s worth noting recent FoI data shows that transparency overall is not improving).

We expect to see the use of charity numbers as unique identifiers for Crown Commercial Service contract awards in the coming months (General Elections and Brexit notwithstanding), with other central government departments following suit sometime after that. We’ll keep you posted as we learn more.

In the meantime, we’ll continue working with the open contracting steering group to explore how these emerging datasets can be used most effectively by charities and policymakers. If you have any thoughts about this, or the use of big data more generally, please leave a comment below.

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Paul joined NCVO over seven years ago after working for a leading public affairs agency. Since then he’s led our policy work on a variety of issues, including welfare-to-work reforms, volunteering, the Compact, public service commissioning and procurement regulations. He now leads our work on funding and finance with a particular focus on charity tax relief and safeguarding EU funding post-Brexit.